Energy Reform To Boost Healthcare Spending

Mexico | Pharmaceuticals & Healthcare | Tue Dec 17, 2013

BMI View: Afterweidentified Mexico as 'the most promising emergingpharmaceuticalmarket' in September 2013, the approval of the energy reform bill has reinforced our view that over the long term healthier fiscal revenue will encourage the government to further increase public healthcare spending and improve the nationalmedical servicestandards. Multinationals will have greater opportunities to fully capitalise on Mexico's strong pharmaceutical and healthcare market growth.

BMI has made an upwards revision to the long-term forecast for Mexico's healthcare expenditure on the approval of an energy liberalisation bill on December 12, 2013. The legislation, which has ended up being more progressive than the bill initially proposed by President Enrique Peña Nieto, will bring significant macroeconomic benefits to the country, mainly through greater investment and export growth. We believe that the energy reform can potentially change Mexico's healthcare market landscape.

We note that Mexico's healthcare expenditure as percentage of GDP is the lowest among OECD countries. At 6.3% in 2013, it is also significantly lower than other major Latin American countries: Brazil (9.4%), Argentina (8.3%) and Chile (7.7%). We believe that although it will take a number of years before results are felt from the country's oil production, over the long term, healthier fiscal revenue due to the energy reform will encourage the government to further increase public healthcare spending and improve national healthcare standards.

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